    [Public Papers of the Presidents of the United States: George W. Bush (2004, Book III)]
    [November 29, 2004]
    [Pages 3016-3017]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Letter to Congressional Leaders Transmitting an Alternative Plan for the
    Locality Pay Increase for Civilian Federal Employees
    November 29, 2004

    Dear Mr. Speaker:  (Dear Mr. President:)
        I am transmitting an alternative plan for the locality pay increase
    payable to civilian Federal employees covered by the General Schedule
    (GS) and certain other pay systems in January 2005.
        Under title 5, United States Code, civilian Federal employees
    covered by the GS and certain other pay systems would receive a two-part
    pay increase in January 2005: (1) a 2.5 percent across-the-board
    increase in scheduled rates of basic pay derived from Employment Cost
    Index data on changes in the wages and salaries of private industry
    workers, and (2) a locality pay increase based on Bureau of Labor
    Statistics' salary surveys of non-Federal employers in each locality pay
    area, which would average about 10.6 percent for eligible employees.
    Including increases for blue-collar and other workers, the total Federal
    employee pay increase would cost about 11.2 percent of payroll in
    calendar year 2005. For Federal employees covered by the GS locality pay
    system, the overall average pay increase would be about 13.1 percent,
    far higher than the 1.5 percent total pay increase I proposed in my
    Fiscal Year 2005 budget.
        For the reasons described below, I have determined that it is
    appropriate to exercise my statutory alternative plan authority to limit
    the January 2005 GS locality pay increase.
        A national emergency has existed since September 11, 2001, which now
    includes Operation Enduring Freedom (in Afghanistan) and Operation Iraqi
    Freedom. Full statutory civilian locality pay increases averaging 10.6
    percent in 2005 would divert resources from and interfere with our
    Nation's ability to fight the war on terror, with

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    respect to which a national emergency is in effect under the law. Such
    increases would cost about $9.8 billion in fiscal year 2005 alone and
    would build in later years.
        Accordingly, I have determined that--
        Under the authority of section 5304a of title 5, United States Code,
    the locality pay percentages authorized in 2004 shall remain in effect
    in 2005.
        Finally, the law requires that I include in this report an
    assessment of the impact of my decision on the Government's ability to
    recruit and retain well-qualified employees. This decision will not
    materially affect our ability to continue to attract and retain a
    quality Federal workforce. To the contrary, since the Congress has not
    funded the cost of a pay raise in excess of the 1.5 percent increase I
    proposed, agencies would have to absorb the additional cost and could
    have to freeze hiring in order to pay the higher rates. Moreover, GS
    quit rates are at an all-time low of 1.6 percent per year, well below
    the overall average quit rate in private enterprise. Should the need
    arise, the Government has many compensation tools, such as recruitment
    bonuses, retention allowances and special salary rates, to maintain the
    high quality workforce that serves our Nation so very well.
             Sincerely,

                                                              George W. Bush

    Note: Identical letters were sent to J. Dennis Hastert, Speaker of the
    House of Representatives, and Richard B. Cheney, President of the
    Senate. This letter was released by the Office of the Press Secretary on
    November 30.